Peter Thiel Says Don't Piss Off The Robots (Or Bet On A Recovery)

Peter Thiel is best known as the guy who cofounded and ran PayPal before selling it to eBay for $1.5 billion in 2002.

Since then, he's founded a $2 billion hedge fund, Clarium Capital, and the Founders Fund, a venture fund with $275 million under management. Peter is also one of Facebook's earliest investors and now sits on the company's board.

Peter is also an investor in Decorati, a site that connects interior designers and potential customers.

We caught up with Peter over the weekend for a wide-ranging discussion on topics including:

Clarium's bet against a recovery

Silicon Valley's cooling passion for Obama

How it's not a good idea to piss off artificially intelligent computers

Eternal life

The Business Insider: So how did you get involved with Decorati?

Peter Thiel: One of the ways we've invested in companies is where we know the people who are starting them quite well and we think they're incredibly determined to make the given business work, and it's a sector where there's something about the market that's really good. Both of these things are true in the case of Decorati. Shane has basically been focused on this sector for a number of years and the whole design industry -- there's obviously alot of value in it but there's a lot of inefficiency as well. Its worth looking to see if something can be done on the internet to make it more efficient and make it available to a larger number of people.

TBI: Are you optimistic that people are spending money on luxuries like getting their homes redesigned again?

PT: I'm optimistic that consumers are looking to find less expensive ways of doing this. We are in a long recession in the US, and in that context there is going to be tremendous premium on finding things that deliver the same quality for less. TBI: I've heard you rent your home in San Francisco, and considering you've been on Fortune's list of the world's richest people, that's sort of surprising. Is that true? Can you explain?

PT: I've thought that we've been in a housing bubble for many years. I owned a place, a condo and sold it in the fall of 2005 in San Francisco. We're still nowhere near the zone where the housing bubble is fully unwound. Maybe its a good time to buy a house in Houston or Detroit, [but] I think it's not a good time yet on the coasts in the US where the valuations are still quite high.

TBI: You endorsed Ron Paul for President in 2008, but during the election Obama got a lot of support from Silicon Valley, how is he doing with that crowd now?

PT: People who supported Obama still support him, people who were skeptical of Obama are still skeptical. The intensity has shifted a great deal. There was an incredible amount of intensity in favor Obama in 2008, and that feels to me is completely gone. There are a lot of contexts in Silicon Valley where a year ago people just wanted to talk about the election, and at this point, politics is no longer fashionable.

My observation on it is that it's striking how few people from Silicon Valley are represented in the Obama administration in any sort of capacity. The only cabinet level person who is even remotely from Silicon Valley is the secretary of energy, who i guess was a physicist at UC Berkeley. People supported Obama over Hilary Clinton in the primary in Silicon Valley in a big way and in a weird way its translated into like no influence at all.

TBI: How would government be different if there were more tech and entrepreneur types running it?

PT: The biggest area of reform that I would identify would be making the government more efficient, where the government can do more with the same amount of money or do more with less money even. That concept just seems alien to the political debate on both sides. The Republican side is that [the government must] do less with less, and the Democratic side is you have to do more with more. The idea that you should do more with less just seems completely outside of the debate.

TBI: You donated over $500,000 to help fund the the Methuselah Mouse Prize, which according to Methuselah Foundation, "s being offered to the scientific research teams that significantly extend the lifespan of middle-aged laboratory mice." But if people started living a really long time, how should we deal with overpopulation?

PT: The country where people are living the longest today is Japan, and the population is actually declining. so whereas you take countries where people have pretty short lives like parts of Africa, are some incredibly fast-growing pops. The link between the two is not that tight. Iif people live forever, you might have a serious growing pop issue but at the same time i think we're not quite there technology-wise, to say the least.

NC: So you're considered a libertarian and an objectivist, but you also fund artificial intelligence research aimed at creating AI that is friendly to humanity. Should an artificially intelligent beings be motivated by our interests as humans or their own self-interest?

PT: [An artificially intelligent computer] could be very good, it could be very bad, it could be somewhere in between. Certainly we would hope that it would be friendly to human beings. At the same time, I dont think you'd want to be known as one of the human beings that is against computers and makes a living being against computers. So probably at the margins it would be prudent not to make a name for yourself as a anti- technological human being just as these computers are coming onto the scene.

NC: Your day job is running a hedge fund called Clarium Capital. The impression out there is that Clarium is betting against a recovery. Is that a correct perception? Can you explain your pessimism?

PT: I don't think that a recovery is impossible. I do think its quite hard to get to a situation where you have a lot of growth in the economy without running into basic constraint problems.

The key thing in the US is going to be doing more with less. If you try to do the recovery buy just doing more of the same and if the recovery is going to consist of going back -- to the housing bubble, going back to leveraged finance, lending money again like crazy, going back to 2005 -- it just seems to me like you're setting yourself up for a real problem. I think you would run right back into four dollar a gallon gas prices and it would sort of correct itself [back into recession].

Longer term I'm hopeful. I'm not wildly optimistic, but I'm hopeful that we will work on and solve these tech challenges which are critical to growth. But i don't think it gets driven by the financial system or even has that much to do with macroeconomic policy. I think it basically has to do with getting innovation working again. I think that's a very long term trajectory. I'm pessimistic in the sense that I dont think people are focusing on that enough.